Small Business Marketing Objectives to Add Another $100K
Frequently a small business has no measurable marketing objectives other than “increase sales” “increase leads”, or “get more customers.” Here’s the secret to setting the right marketing objectives, and then tweaking the results to get 5-10 times more.
- How you set targets for your marketing plan determines the probability of you getting there, and to where, how many dollars, how many clients.
- How you measure your real results, progress, determines whether you keep improving.
Do you know how many people are actively looking for you?
Most of my clients discover there’s probably 1,000 or more looking for what they do, sometimes right here in our small city. Yet they’ve been doing their marketing by throwing a little of this or that out and wondering why no one replied. So their next action is “My marketing didn’t work, so I’ll never do that again.”
WRONG thing to do. Marketing is one of those critical activities. So if you know how many are looking one objective would be to get 5% to 10% of them. And we’ll put a plan together to land that number as the first step.
Another would be to OWN or DOMINATE that market. If there are 1,000 looking for what you do right there in your city wouldn’t we want to be the biggest player, and wouldn’t we want to know how many of those that are looking are landed regularly by our competition.
One aha moment for many of my clients is that they discover the competition isn’t really doing any better than they are at acquiring new clients. Everybody is pretty much the same, so we have a HUGE opportunity. Once we get it right it would be EASY to be the top player in this market.
I frequently hear “I’m not a big player” so not only do I not expect to get a lot of that market, but “I’m not sure I could handle the growth.” Hmm. Sounds like a loser’s way of thinking. Wouldn’t you rather have people lined up outside your door begging for what you have, and THEN choose who you want to work with, and take only as many as you feel comfortable handling. And grow at your own pace rather than being at the mercy of who calls you this week? I would.
Your Answer . . . the Scientific Marketing Formula
Marketing is really a simple formula; the number of people who see your marketing message times the conversion rate of the marketing formula which tells you how many people should be calling you every week and every month.
So back to your marketing objective. If you know how many new clients you need each week to make the kind of revenue you need, use the marketing formula to work backwards to how many you get that marketing message out to, with a 5% to 10% marketing conversion rate.
So let’s say that you want to make $100K in whatever time frame, and each client is worth $1,000 over the year. That means that you need 100 customers, or about 2 a week, or 8 a month.
First what is your sales success rate? Let’s say that you close 50% of your sales. Therefore you need 8/50% = 16 people coming to you from your marketing every month. And if people respond to your current marketing message at about 5%, then you need to get your marketing out to 16/5% = 320 people a month.
The marketing formula will be 320 x 5% = 16 leads.
Our marketing objectives become
- Touch 160 people with some form of marketing.
- 5% of those we touch will respond by calling us, signing up, or whatever that marketing step is.
- That will result in 16 interested people a month
- 8 of which will buy at least $1,000 over the next year.
Those become the first of our marketing objectives, marketing targets. However, what happens now if we don’t get those the very first month?
Simple, we’ve got two marketing variables that control our outcome of 16 leads a month. Either we increase the number of people getting the marketing message until we get 16 leads a month, or we deal with our marketing message.
If we aren’t getting at least 5% of those we touch showing not just a little interest, but actually begging us to help them get what they want, then we’ve got a poor marketing message and it needs to be fixed.
Notice something? At no time did I say “that didn’t work, we won’t do that again?”
In fact, if you look at the marketing formula and say, “OK we’ll send zero this month” the formula quickly tells you that you’ll get zero clients, and zero dollars. That isn’t an option.
How Many Customers Do We Want to Buy?
Three other marketing objectives we need to set are
- What does a customer cost to acquire?
- How much are we willing to spend to acquire a client?
- How many of them do we want to buy?
This changes the whole perspective of marketing being an expense that should be avoided, to one that generates a steady income.
For our example, let’s say that our marketing actually costs us about $1 per prospect touch. It could be $1 per piece of mail, $1 per Google Adwords click, $1 per person that comes from a newspaper advertisement, or whatever.
Let’s say that our marketing conversion is 10% (10% is an easy number to work with). So if we spend $1 per piece of mail, then we should get one call for every 10 pieces of mail. In other words about $10 per lead.
And if you close 50% of those you meet in your sales meetings, then it costs $20 to acquire a customer.
If every customer is worth $1,000 like we discussed in the first example, then for an investment of $20 you end up with $1,000 in sales, or 50 to 1 Return on investment.
At that point the right question to be asking yourself is, “How many customers do I want to buy?” If a customer is worth $1,000 each then we want to buy 20 of them.
If we want $100,000 in sales this year with a 50:1 ROI, we should invest $2,000 in our marketing. And, if we aren’t willing to invest $2,000 either you won’t get to $100,000, or we have to start in smaller steps. In this case $2,000 for the year works out to be about $167 a month.
But, let’s back up a minute and say that instead of getting 10% marketing response we get only 0.1% which is more like most small businesses get. The response rate you get depends on what you say, how you say it, and who you say it to. The percentage is your grade card on how compelling your marketing message is. While 10% is certainly possible if you do it right, most small businesses do their marketing so poorly that they get 0.1% or even less.
But let’s run the 0.1% and see what happens. It’ll cost a LOT more to acquire a client.
Now, if we spend $1 per mailer, and with a 0.1% conversion rate, we’ll need to touch 1,000 people to get 1 sale. We’ll be sending 1,000 mailers at $1 each, or $1,000 to get that one lead.
So we are now at $1,000 per lead. And if we close ½ of them that’s $2,000 to acquire a customer.
But let me tell you that if what you say in your marketing isn’t pulling them in, then why do you think your sales success would be any better. So it’s very like that your sales results will also drop, and that increases your cost to acquire a client by possibly 5 times to 10 times, or we are now at $10,000 to buy a customer.
Your Marketing Response, and Sales Close Ratio Determines Your Cost to Acquire a Customer
What this tells us is that the biggest cost you may have toward acquiring a customer is not the up front cost of your mail, your website, or whatever. It’s whether you marketing response is high, 5% to 10% or even higher . . . or it’s down in the mud at 0.1% which is where most small businesses are . . . and this is why many small businesses find marketing too expensive to do.
But without marketing . . . you’ll have no customers and no income.
So, we need to work on the marketing formula to get the marketing message into a reasonable target, maybe 1% to 5% to start, and run that calculation to be sure that you can afford to buy customers before just throwing a marketing message against the wall to see what sticks.
Increase Your Marketing Response . . . Lower Your Cost to Acquire A Customer
The key to hitting it out of the park with a good marketing message is to follow these guidelines.
- Marketing is NEVER about you, your products, your services, or your process.
- Marketing is ALWAYS about what your customer wants
- Marketing is about RESULTS, not a service or a product.
- Marketing is about THE VALUE of those RESULTS since people buy the most valuable thing they can find.
So your marketing message isn’t saying “I sell a _______” since that’s about you or your product. Instead if we said “We help ________ (name the people you help) reach ____________ (name a result) and then name how much.”
So if you sell something that helps with weight loss, don’t name the brand, or product name. Say something like “We help people who have never been able to lose weight no matter how hard they tried. And our clients lose 30 lbs a month easily.)
That’s about results, and how much results. It tells you how valuable it is. Just compare that to someone saying “I am a weight loss coach” or “I sell XYZ weight loss products.” No comparison.
If you’d like to see your marketing message drive them crazy, to line up down the street, and around the corner, give me a call, 816-415-8878. The first 30 minutes is free to help you discover that message that’ll drive them crazy.
We’ll also put together a marketing objective for you that shows you how to reach your first $100K.
Alan Boyer, $100K Small Business Coach
Helping Small Business owners reach another $100K to $1M within months and to stop playing in the kiddie pool when acquiring customers.